Luxury brand Chanel announces price cuts for mainland China

Absrtact: March 20 report Do you remember the Chinese aunt who ate the noodles on the front road of Gucci shop in the Italian famous street? In the foreseeable future, these mothers may be able to buy almost the same price and quality of luxury goods in front of the computer and even in the domestic counters.

March 20 Report

Remember the Chinese lady who ate the noodles on the front road of Gucci shop in the Italian famous street? In the foreseeable future, these mothers may be able to buy almost the same price and quality of luxury goods in front of the computer and even in the domestic counters, without having to go to sea to buy.

Recently, the luxury brand Chanel announced that it would cut prices in mainland China, while raising European prices, the range is 20%, after the price difference between the two sides not more than 5%. Chanel said the price adjustment to reduce the prices of various markets, and to combat purchasing market. Subsequently, luxury group LVMH's Swiss watch Tag Heuer also announced a 13% reduction in sales, and the French brand Dior's two-style handbags have been reduced by 10% this month.

What impact will the price of Chanel and other luxuries have on the already struggling Chinese luxury goods dealers? "The future of pure luxury electricity dealers will be more difficult to survive and the only way out," said Tencent technology. ”

Chanel is just the first step.

According to Tencent Science and Technology, Beijing, Shanghai, some of the Chanel stores have been informed of price adjustment and have been replaced product prices, some of the products have been known in advance of the news of consumers a grab and empty.

Previously, luxury goods in the domestic has been a case of price reduction. 2014, LVMH's high-end wrist watch brand, real power, Heuer has provoked Hong Kong, the mainland, the same price banner, hoping to use the price advantage to activate the mainland consumer market. The price difference between the mainland and Hong Kong was 10% to 20%.

This seems to be inconsistent with the usual pattern of luxury goods, which has been reported that some luxury brand manufacturers would prefer to destroy the season or even some damaged goods, and do not want to reduce sales, in order to maintain the high-end image of luxury goods.

According to a luxury brand insider, for many luxury consumer groups, the price is not important, even in the off-season, luxury goods will not be discounted, because discounts will give customers a hint of quality, thereby reducing their desire to buy.

At the same time, the insider also said to Tencent technology: "When entering China, luxury prices are based on the exchange rate, but because the Chinese market is relatively closed, these luxury brands can make money without any changes, so no luxury brands are willing to reduce prices." ”

This claim has also been recognized by the industry, a luxury channel for Tencent Technology, said the Chanel price reduction, may increase some of the Chinese market sales, but in the long run, the overall income will not increase.

So a natural question, why would Chanel do that?

Purchasing impact on the domestic counter

During the Spring Festival in 2015, Chinese outbound travel and crazy procurement of various news everywhere, go to Europe to buy Louis Vuitton bags, baby formula, go to the United States to buy Prada bags, Tiffany jewelry, Hermès scarf, to Korea to buy skin care products, to Japan to purchase rice cookers, toilet covers, rice ...

Now most of the tourist area stores have started to hire Chinese-speaking staff to cope with the influx of Chinese "tourists", there are news that businessmen even pressure the government, hoping to simplify the visa procedures for Chinese shoppers to attract more Chinese consumers to come shopping.

So the question is, what is the cheapest way to buy luxury goods overseas?

The answer is South Korea's Incheon Airport, Beijing round-trip Seoul round-trip ticket but about 2000 yuan, landing without the airport that is shopping, then direct return, if the purchase of some of the profits, even the ticket money can be earned. No wonder there are people in the industry to take Incheon airport as a shopping center.

The Chinese tax Exemption report, released late last year, said the Chinese bought 47% of the world's luxury goods in 2013, 73% of which were foreign consumption. The reason for this huge data gap is that domestic luxury prices are at least 50% higher than abroad. "Discriminatory" price differentials are thought to be the main reason for Chinese consumers to abandon their domestic stores and opt for overseas purchases or cross-border electricity and purchasing. The recent depreciation of foreign currencies such as the euro and Japanese yen and the legalization of cross-border electricity producers have exacerbated this trend.

At the same time, a large number of Chinese luxury stores vacant, become billboards, display shops, but also carry a large number of operating costs, resulting in a more and more thin brand profits. Luxury brands are becoming aware of the need to return consumers to the Chinese market.

There are insiders on Tencent Technology said: "The cost of luxury goods is mainly not this time the price of Chanel will seriously squeeze the profit of buyers, who are engaged in overseas purchases of luxury goods in the circle of friends to Tencent Technology, said:" From the current price fluctuations, may abandon the luxury purchase, and into other areas. " ”

Poly-Mei Excellent products senior Vice President Liu Huipu Tencent Technology said: "With the rapid development of the electrical business industry, the current domestic and foreign information highly transparent, the former luxury industry, market information asymmetry was completely broken." In addition, the Government's promotion of cross-border electricity industry has also played a role in pushing down the price of luxury goods. ”

New opportunities for luxury electricity dealers?

Domestic luxury electric dealers started in 2010, 2011, a large number of luxury electricity dealers online, and quickly accepted by consumers. But over the past two years, luxury electric dealers have suffered a survival crisis.

In fact, China's luxury consumer market has ranked second in the world, so why would the luxury electricity dealers fall so down?

According to the industry to describe the main reasons for two: "First of all, it is difficult for luxury goods companies directly to obtain a stable supply of goods, goods update slow, supply channels narrow; second, luxury buyers are most important to the personalized needs and high-quality services, this is the electrical business system is not good at the field. ”

At the beginning of this year, the luxury electric business industry turmoil, still product network was exposed two degrees of layoffs, and foreign fashion discount electric Dealer Outnet also be passed or will withdraw from the mainland market. In addition to the luxury counters, luxury electric dealers are also affected by the purchase of the sea, which makes the luxury electricity dealers have to be mired in advertising competition and crazy price war fatigue.

In the face of this dilemma, once the luxury electric dealers have been transformed, the day involved in the layoffs of the network is not a traditional luxury goods, and the transformation of the positioning as a fashionable lightweight website, tore off the label of luxury goods, once used luxury consignment temple net, turned into a high-end consumer service platform, No more luxury goods and electric dealers.

The industry suggested that luxury electric dealers can take the "online sales + offline experience" Sales model, improve customer consumption experience. For luxury consumers, in addition to direct purchase, they have a higher demand for after-sales service and shopping experience.

The Chanel price cut, perhaps will let the main prices of overseas purchases are suppressed, luxury goods dealers if they can grasp the online service experience, may be a new opportunity.

Temple Library brand Marketing center Zhu Xiaoxuan said: "Temple will closely follow the market trend, next week will be a substantial price adjustment to the Chanel products, and keep a large number of spot, so that consumers can stay at home in the Temple Mall and the club Chanel area to buy the satisfaction of luxury goods." "At the same time, Zhu Xiaoxuan also stressed that although the price significantly reduced, but the temple can still be online through the combination of the way to ensure that members enjoy localized luxury maintenance services, in the first time to meet consumer demand.

Whether the future luxury products will continue to reduce prices, the relevant people to Tencent Technology said: "The more new brands will be linked to the Chinese market, now the Chinese market is no longer closed, the future will inevitably have more luxury choice price reduction, or domestic and foreign prices roughly equivalent." ”